Home » 2012 » Greek sovereign debt crisis and Ecuador (Speech in Quito, 15/2/2012)

Greek sovereign debt crisis and Ecuador (Speech in Quito, 15/2/2012)


Firstly, I would like to thank you very much for the invitation to this very interesting congress. Your ambitious effort for the formation of a financial architecture different to the IMF’s shows that there are real alternatives to the nightmare without end that the peoples in the peripheral countries of Europeare currently living in. I’m speaking about Greece, Portugal and Ireland and as of late, Italy and Spain.

The common element in all these cases is a very big public debt and an equally big budget deficit which, in the aftermath of crisis of 2008, was characterized as unbearable and unviable. Under the threat of imminent derailment of public finance (something that actually was never proved to happen) during the last two years, Europe lives under the iron heel of the most severe, the most inhuman austerity measures that have been imposed in our region since the post war period.

I’m describing their common characteristics:

  • Cuts in social spendings and especially to health, education, social security and transportation
  • Cuts in wages, salaries and pensions
  • Privatizations of public utilities (water, energy, etc.) and a massive sell-off of public property, and
  • Increases in every kind taxes that are paid by the people.

These measures are deeply unjust because the roots of this current crisis aren’t in the generous welfare state of these countries which never had high wages or well-equipped hospitals.

The root of the current sovereign debt crisis must be trailed to the following causes. I’m speaking specifically forGreece, in the sense that these causes aren’t the same with other eurozone countries that suffer from bail-out mechanisms. In any case there are serious similarities between all these countries.

  • Tax cuts for the rich and the private sector, in the context of a neo-liberal agenda that has been imposed since 80’s throughout the world. But especially in continentalEuropeits implementation started in the 90’s under the Maastricht Treaty which laid the fundamentals for the eurozone.
  • Current payments for the servicing of the debt. For example Greece (with a GDP of 212 bn of euro, according the state budget) during 2012, which is the fifth consecutive year of recession, will pay 87 bn of euros for servicing of debt when tax revenues will be 53 bn and will give for education 5,7 bn and for public health 4,8 bn. Looking at the previous years, Greece during the last two decades has paid for the servicing of the debt twice the amount of the debt in its today level of 360 bn euros.
  • Increasing military spending through all the EU countries which serve the imperialistic plans ofGermany. EspeciallyGreeceas a result of the turkish enemity and demands of NATO gives a scandalous, totally disproportionate percentage of its budget for military spending.

It is obvious that if someone wanted to confront the sovereign debt crisis one should confront the previous reasons: i.e. increasing the taxes of rich and corporates, to stop servicing the debt and reduce the military spending.

In spite of these possible solutions, the European ruling classes imposed the most brutal austerity packages and, at the same time, gave huge amounts to the banks, leading to the explosion of the fiscal problems. For example in Greece the first bail-out loan was 110 bn of euros, but at the same time the Greek finance minister has made available for Greek banks 155 bn of euros, either in the form of cash or in the form of guarantees. As a result Greek debt which was 115% when government decided to call on the IMF is now 165%!!!

Just the same happened inIrelandwhen the government announced the bail-out of the private banks. In this way, nationalizing the private losses, the Irish government led a public debt of 30% of GDP to the sky: 130%. The hypocrisy of the European (centre-left and right-wing too) governments could be seen inSpainwhere the public debt (61% of GDP) is significantly lower, even to that ofGermany(83%) in the 2010.

And after of all this, the European Commission contests that the rescue programmes failed because they have not been implemented with the adequate strictness. So they ordered increased instalments of the same poisonous medicine. It is striking that this doesn’t happen only inGreece, which is characterised as a bad pupil due to the combating heritage of the labour movement and the Left. In Greece failure was observed before anyone else because Greece was the first to face the test of IMF and EU conditionality in May of 2010, in the northern hemisphere and specifically in Eurozone. But now the exact same failure can be seen inPortugalwhich entered the bail-out mechanism in May of 2011, where the interest rates have reached the record level of 14% and the government discusses withBerlina new bail out loan!

After of all this, there is a question: Can we speak about failure even inGreecewhere the last memorandum of understanding which accompanies the new loan of 130 bn of euros is the seventh from May of 2010 when the first one was signed?

By my opinion, no! The bail-out plans had no intention to save the Greek or Irish economy and even less to secure or improve the living standard of Portuguese or Spanish people. The aim was to close the parenthesis that opened in the first post war period, whenEuropecovered in the shame of colonialism, bought out the labour movement with the welfare state. In this struggle, (which embodies the response of capital to the current structural crisis) the ruling classes – governments and financial organisations, like IMF and ECB  – use debt as a very good opportunity for paralysing peoples’ reactions.

The response of the big majority, of the 99% to use a current political terminology, must be the following slogan that is said in every square of Greece: we don’t owe, we don’t pay we don’t sell.

In this struggle, the audit of public debt offers a huge help as it contributes to the de-ligimitation of the public-debt. By asking to open up the books of debt, as primarily a struggle from within the social movement, and not coming from the technocrats, we have cancelled the methods of shock and awe that are based on the ignorance of the people. In this struggle there is something else that is also very significant: The living example of countries like Ecuador which refused to accept the orders of the creditors. Respecting the very big political, economical and historical differences, we want to do just the same thing in Greece and all the other eurozone counties that are on the brink of collapse because of their indebtedness.

Nowadays Ecuador’s example is much more of a teaching than a year ago, when we were making the film Debtocracy and showed to Greeks and other people that TINA (there is not alternative) had died in the Andean heights. Now, the Greek drama has shown that every solution that is based in the compromise and the negotiations with the creditors and the international financial organisations leads to unemployment, poverty, neocolonial loan agreements, police brutality, constitutional coup d’etats and finally at default. At the other side cessation of payments and debtor-led defaults may be the first scene, our first success in this, long duration play to overthrow the attack of capital.

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  1. […]  Greek sovereign debt crisis and Ecuador (Speech in Quito, 15/2/2012) Share this:TwitterFacebookLike this:LikeBe the first to like this post. Explore posts in the same categories: Αριστερά, Κόσμος, Οικονομική κρίση, Πολιτική, Χρέος, άρθρα […]

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